1.

RESULTS AND INTERPRETATION

ISLAMIC BANKS:

ROE ROA NSR DTA CAR ADV
Mean 2.46 -0.3496 47.7252 72.3556 23.9012 14.2088
Median 0 0.02 47.7 78.75 17.65 13.61
Maximum 28.18 1.91 77 85.97 51.8 30.47
Minimum -12.55 -3.49 24.57 42.16 9.58 4.5
Std. Dev. 8.979317 1.446543 10.79265 13.03161 13.73281 6.91089
Skewness 1.130961 -0.50411 0.268967 -1.01206 0.8211 0.521915
Kurtosis 4.304502 2.34539 4.667287 2.704974 2.204642 2.334003
Jarque-Bera 7.102099 1.505245 3.197101 4.358472 3.468142 1.597015
Probability 0.028695 0.471129 0.202189 0.113128 0.176564 0.45
Sum 61.5 -8.74 1193.13 1808.89 597.53 355.22
Sum Sq. Dev. 1935.075 50.2197 2795.552 4075.746 4526.164 1146.25
Observations 25 25 25 25 25 25








CONVENTIONAL BANKS:

ROE ROA NSR DTA CAR ADV
Mean 9.2368 -3.1972 37.5244 76.1204 14.1096 16.4168
Median 11.18 1.21 35.83 76 11.35 16.05
Maximum 37.66 52.91 75.26 85.52 45.03 27.46
Minimum -83.98 -65.05 5.31 52.23 5.35 7.57
Std. Dev. 27.46183 21.48512 20.10444 6.946273 7.77835 3.775496
Skewness -2.04404 -0.94243 0.462888 -1.52435 2.653769 0.589698
Kurtosis 7.042359 6.590064 2.202433 6.596885 11.0809 4.906097
Jarque-Bera 34.43027 17.12629 1.555388 23.15852 97.36556 5.233523
Probability 0 0.000191 0.459464 0.000009 0 0.073039
Sum 230.92 -79.93 938.11 1903.01 352.74 410.42
Sum Sq. Dev. 18099.65 11078.65 9700.523 1158.017 1452.065 342.1049
Observations 25 25 25 25 25 25

Descriptive table shows the result of statistics of data of 5 Islamic banks and 5
conventional banks which is a part of sample size of research. In this table Mean is presenting
the average of all the values of dependent variables and also values of independent variables of
Islamic banks and conventional banks. Standard deviation is describing the distance from the
mean, Median, Max and min values of the dependent variables and the values of independent
variables are also shown. In Islamic banks data the mean of the dependent variables ROA is -
0.3496. Standard deviation of ROA (dependent variable) is 1.446543.Max value of ROA is 1.91
and its minimum value is -3.49. Median of ROA is 0.02. In Conventional banks data the mean
of the dependent variables ROA is -3.1972. Standard deviation of ROA (dependent variable) is
21.48512. Max value of ROA is 52.91 and its minimum value is -65.05. Median of ROA is
1.21.Islamic banks ROA is better and higher than conventional banks. Islamic banks ROA is
more consistent than conventional banks.

In Islamic banks ROE, NSR, DTA, CAR and ADV are independent variables there mean
are shown as 2.46, 47.7252, 72.3556, 23.9012 and 14.2088 respectively. And in Conventional
banks ROE, NSR, DTA, CAR and ADV are independent variables there mean are shown as
9.2368, 37.5244, 76.1204, 14.1096 and 16.4168 respectively. Islamic banks Mean of
independent variables NSR and CAR are high than conventional banks but ROE, DTA and ADV
are low than conventional banks. Islamic banks Standard deviation of ROE, NSR, DTA, CAR
and ADV (independent variables) are 8.979317, 10.79265, 13.03161, 13.73281 and 6.91089
respectively. And in Conventional banks Standard deviation of ROE, NSR, DTA, CAR and
ADV (independent variables) are 27.46183, 20.10444, 6.946273, 7.77835 and 3.775496
respectively. Islamic banks SD is lower than conventional banks which is shown that Islamic
banks is performing well than conventional banks due to minimal fluctuation in variables. It is
shown Islamic banks consistency than conventional banks. Islamic banks Maxi value of ROE is
-12.55 & Min value is 28.18. Median of ROE is 0.Conventional banks Maxi value of ROE is
37.66 & Min value is -83.98. Median of ROE is 11.18.ROEs max and min value is supportive
for Islamic banks than conventional banks. Islamic banks Max value of NSR is 77 & Min value
is 24.57. Median of NSR is 47.7.Conventional banks Max value of NSR is 75.26 & Min value is
5.31. Median of NSR is 35.83.NSRs maxi and min value is less favorable for conventional
banks than Islamic banks .Islamic banks Max value of DTA is 85.97 & Min value is 42.16.
Median of DTA is 78.75. Conventional banks Max value of DTA is 85.52 & Min value is
52.23. Median of DTA is 76.DTAs max and min values are favorable for conventional banks.
Islamic banks Max value of CAR is 51.8 & Min value is 9.58 and Median of CAR is
17.65.Conventional banks Max value of CAR is 45.03 & Min value is 5.35 and Median of CAR
is 11.35. CARs max and min value is almost same for both Islamic and conventional but Islamic
banks CAR ratio is strong and low risky. Islamic banks Max value of ADV TURNOVER is
30.47 & Min value is 4.5. Median of ADV TURNOVER is 13.61.Conventional banks Max
value of ADV TURNOVER is 27.46 & Min value is 7.57. Median of ADV TURNOVER is
16.05. ADV TURNOVERs values are favorable for conventional banks but not worst for
Islamic banks.







ISLAMIC BANKS:

ROE NSR DTA CAR ADV
ROE 1
NSR 0.165986 1
DTA 0.373151 -0.26903 1
CAR -0.47588 0.364653 -0.69399 1

ADV 0.582182 -0.14538 0.262491
-
0.48572 1


CONVENTIONAL BANKS:

ROE NSR DTA CAR ADV
ROE 1

NSR 0.484697 1

DTA -0.20929 -0.44872 1

CAR 0.259216 0.569388 -0.77756 1

ADV 0.121465 0.121902 0.339989
-
0.17463 1

Table2 shows the correlation matrix of the independent variables of Islamic banks data.
Correlation research is a statically techniquewhich is correlate the one variable with another
variable and also show the relationship among between variables. When Correlation is positive
when the values move is same direction but when they move in opposite direction correlation is
negative.
In this matrix Islamic banks ROE has positive relation with NSR, DTA and ADV
TURNOVER and ROE has negatively direction with CAR.Coventional banks ROE has positive
relation with NSR, CAR and ADV TURNOVER and ROE has negatively direction with DTA.
And Islamic banks NSR has positive correlation with CAR. And NSR has negatively direction
with DTA and ADV TURNOVER. Its means that NSR moves is in opposite direction with other
all independent variables instead of CAR. Conventional banks NSR has positive correlation
with CAR and ADV TURNOVER. And NSR has negatively direction with DTA. Islamic banks
DTA have positive relationship with ADV TURNOVER and have negative direction with CAR .
Conventional banks DTA have positive relationship with ADV TURNOVER and have negative
direction with CAR. Islamic banks CAR has Positive correlation with NSR but it is negatively
associated with the ROE and DTA. Conventional banks CAR has Positive correlation with NSR
and ROE but it is negatively associated with the DTA. In correlation matrix Islamic banks ADV
TURNOVER has positive relation with ROE, DTA and CAR and ADV TURNOVER has
negatively direction with NSR. Conventional banks ADV TURNOVER has positive relation
with ROE, DTA and NSR and ADV TURNOVER has negatively direction with CAR.











ROA

ISLAMIC CONVENTIONAL
Variable Coefficient t-Statistic Coefficient t-Statistic
C
0.320884 0.140133
17.53921 0.406762
ROE
0.113751 3.709645
0.537012 5.950502
NSR
0.031793 1.495891
-0.104038 -0.699444
DTA
-0.023588 -1.139603
-0.33466 -0.634217
CAR
-0.028199 -1.238573
1.120885 2.332101
ADV
-0.006119 -0.167039
-0.739088 -1.14412

R-squared
0.671548
0.807808 -1.14412

F-statistic
7.769405
15.97187



In regression model Islamic banks ROEs value is significant and other variables have
insignificant values. R-squared is 0.671548 which is favorable value and f-statistics is 7.769405
and its also favorable value. Conventional banks ROE and CARs value is significant and more
than 2. Other variables have insignificant values. Conventional banks R-squared 0.807808 and f-
statistics is 15.97187. Both values are favorable for research.









Combine result of Banks


ROE ROA NSR DTA CAR ADV
Mean 5.8484 -1.7734 42.6248 74.238 19.0054 15.3128
Median 4.865 0.51 43.3 76.89 14.365 14.995
Maximum 37.66 52.91 77 85.97 51.8 30.47
Minimum -83.98 -65.05 5.31 42.16 5.35 4.5
Std. Dev. 20.50823 15.13897 16.77996 10.50844 12.10218 5.623013
Skewness -1.94046 -1.586 -0.04037 -1.44183 1.448287 0.247424
Kurtosis 9.483933 13.37675 2.650617 4.387628 3.915939 2.957895
Jarque-Bera 118.9644 245.2888 0.267893 21.33546 19.22725 0.51385
Probability 0 0 0.874637 0.000023 0.000067 0.773426
Sum 292.42 -88.67 2131.24 3711.9 950.27 765.64
Sum Sq.
Dev. 20608.79 11230.23 13796.78 5410.935 7176.673 1549.295
Observations 50 50 50 50 50 50
Table 1: Descriptive Statistics


Descriptive table shows the result of statistics of data of ten banks from banking industry
including five Islamic banks and five conventional banks which is a part of sample size of
research. In this table Mean is presenting the average of all the worth of dependent factors also
rate of independent variables. Standard deviation is describing the distance from the mean,
Median, Max and min assessment of dependent and independent variables are also shown. The
mean of the dependent variables ROA is -1.7734. Standard deviation of ROA (dependent
variable) is 15.13897.Max value of ROA is 52.91 and its minimum value is -65.05. Median of
ROA is 0.51.islamic banks have better and less deviate ROA than conventional banks in banking
industry.
ROE, NSR, DTA, CAR and ADV are independent variables there mean are shown as 5.8484,
42.6248, 74.2338, 19.0054 and 15.3128 respectively. This is shown that Islamic banks are good
in NSR and CAR ratio but conventional banks are competed in ROE and DTA and adv turnover
has a mix consistency in industry. Standard deviation of ROE, NSR, DTA, CAR and ADV
(independent variables) are 20.50823, 16.77996, 10.50844, 12.10218 and 5.623013 respectively.
This is shown that Islamic banks are much consistent than conventional banks due low deviation
.A Max value of ROE is 37.66 & Min value is -83.98. Median of ROE is 4.865. A Max value of
NSR is 77 & Min value is 5.31. Median of NSR is 43.3. A Max value of DTA is 85.97 & Min
value is 42.16. Median of DTA is 76.89. A Max value of CAR is 51.80 & Min value is 5.35 and
Median of CAR is 14.365. A Max value of ADV TURNOVER is 30.47 & Min value is 4.50.
Median of ADV TURNOVER is 14.995.Maz and min value is shown that Islamic banks values
are consistent and not has a high difference between max and min value.















ROE NSR DTA CAR ADV
ROE 1

NSR 0.352529 1

DTA 0.038702 -0.33473 1

CAR -0.07474 0.470585 -0.71408 1

ADV 0.240036 -0.06915 0.305751
-
0.44975 1
Table 2: Correlation


Table2 shows the correlation matrix of the independent variables of Islamic banks data. It
is a strategy which is used to measured dependency of on variables of on another variables and
also determine if there is a relationship between them. Correlationis positivewhen the values
move issame directionbut when theymove in oppositedirection correlation isnegative.
In this matrix ROE has positive relation with NSR, DTA and ADV TURNOVER and
ROE has negatively direction with CAR. And NSR has positive correlation with CAR. And NSR
has negatively direction with DTA and ADV TURNOVER. Its means that NSR moves is in
opposite direction with other all independent variables instead of CAR. DTA have positive
relationship with ADV TURNOVER and have negative direction with CAR .CAR has Positive
correlation with NSR but it is negatively associated with the ROE and DTA. In correlation
matrix ADV TURNOVER has positive relation with ROE, DTA and CAR and ADV
TURNOVER has negatively direction with NSR.











ROA

Variable Coefficient t-Statistic
Table 3: Regression

In regression model Islamic banks ROEs value is significant and other variables have
insignificant values. R-squared is 0.632108 which is favorable value and f-statistics is 15.1201
and its also favorable value. Conventional banks ROE and CARs value is significant and more
than 2. Other variables have insignificant values. Conventional banks R-squared 0.807808 and f-
statistics are 15.97187.Both values are favorable for research.




2. Conclusion
C 1.992997 0.113901
ROE 0.535904 6.999457
NSR 0.054707 0.523072
DTA -0.126228 -0.670461
CAR 0.266552 1.392097
ADV -0.321787 -1.130771
R-squared 0.632108

F-statistic 15.1201





Research was conducted on basis of comparative study of two types basic banking
approach. First one is adopt capitalistic strategy and second one is follower of Islamic Sharia.
Although, commercial banking institutions are working in Pakistan from four to five decades
which is shown their penetration in services concern. But Islamic banks started their operations
very recently but still their position in the banking industry is very satisfactory. Islamic rules
base banks performing outstanding than commercial banks in recent world financial crises. They
are as profitable as other conventional banks. One of the reasons that Islamic banks are not
dependent on debt finance like conventional banks. Thats why there no logical reason for
lending and borrowing risk. This is an edge for Islamic banks than conventional that they rely on
equity financing than debt financing because it is reduce banks investment risk. This edge was
very helpful in international financial crises to Islamic banks to survive in depressed economy.
In research i found that in Pakistan Islamic banking is operating favorabely than interst base
banking. Islamic banks efficiency is favorable to compete in banking industry. Islamic banks
return on asset is at optimal level and very supportive than interest base banking. Islamic banks
CAR ratio is too good that is an indication about low risk and secured financing. Conventional
banks deposits to asset ratio is very attractive for potential customers and also higher than non-
conventional banks which is concluded that conventional approach majorly rely on debt
financing but Islamic banks depend on equity financing. Over all Islamic banks have higher
growth in banking than conventional banks.


5.1 Recommendations:
Islamic bank and conventional banks have different capital structures.
Islamic banks are working in non-Muslim countries of world.
You can also use other models for performance measurement.